Global markets fall sharply after passenger plane shot down in Ukraine

Crash revives investors’ fears over tensions between Ukraine and Russia

European shares slumped yesterday, sharply extending losses at the end of the trading day on news that a Malaysian passenger plane had been shot down in Ukraine near the Russian border.

The crash of Malaysia Airlines flight MH17 revived investors' fears over tensions between Ukraine and Russia. The European Union and United States have slapped new sanctions on Russia over what Washington says is Moscow's failure to curb violence in Ukraine.

Analysts said they expected the incident, which happened just before the most European markets closed, to add more negative pressure and volatility to the European stock markets in the coming days.

DUBLIN The Iseq index closed only 0.6 per cent down at 4,734.10, but the effects of increased turmoil in the Ukraine may be felt today. Overall, traders said activity on the Dublin market was mixed. A slump in airline stocks linked to a report from Norwegian Airlines signalling higher-than-expected costs pushed Ryanair and Aer Lingus shares down on the day.


Ryanair finished down 1 per cent at €6.82 which was a better performance than several of its European rivals. Aer Lingus ended up 2.6 per cent down at €1.34. However, the stock saw a high volume of trade with some four million shares exchanging hands, suggesting a big buyer, possibly Etihad, may be increasing its stake.

Bookmaker Paddy Power had a good day closing 3.3 per cent up €52.94 though the volume of trading was low. Bank of Ireland was flat on the day at €0.25 while AIB ended up 1 cent up at €0.11.

LONDON Traders switched on to ITV today as a swoop by the owner of Virgin Media for a 6.4 per cent stake in the commercial broadcaster fuelled takeover speculation.

While Liberty Global stressed it had no plans to make a bid, the purchase of BSKyB's holding for £481 million excited investors.

ITV shares surged 11.3p to 195.1p, while BSkyB was 7.5p higher at 897.5p.

The developments provided welcome relief for the London market as the FTSE 100 Index gave up a large slice of the gains seen in the previous session to finish 46.4 points lower at 6738.3.

EUROPE European shares were sharply lower and safe-haven investments like gold and government bonds rose after the news of MH17 broke.

The pan- European FTSEurofirst 300 index closed down by 1 per cent at 1,363.19 points. Germany's DAX, which hit a record high of 10,050.98 points in late June, fell 1.1 per cent to 9,753.88 points, while France's CAC declined by 1.2 per cent to 4,316.12 points.

In a sign of heightened fears over the situation, the Euro STOXX 50 Volatility Index closed up by 19.2 per cent at 17.65 points.

Pharmaceutical firm Novartis lost 1.7 per cent after posting quarterly profit that missed projections. SAP rose 2.4 per cent after the largest maker of business-management software posted revenue that beat estimates.

US The Dow Jones industrial average fell 161.39 points or 0.9 per cent, to 16,976.81, the S&P 500 lost 23.45 points or 1.18 per cent, to 1,958.12 and the Nasdaq Composite dropped 62.52 points or 1.41 percent, to 4,363.45.

“We started the day on an unstable geopolitical situation . . . then out of the blue you get this tragedy,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

Equities had been holding near the unchanged mark earlier in the session, largely on the back of solid earnings from companies such as Morgan Stanley, which was down 0.62 per cent at $32.30, and UnitedHealth, up 1.61 per cent at $85.11.

Microsoft shares rose 1.02 per cent to $44.53 after the company said it would cut up to 18,000 jobs, resulting in pre-tax charges of $1.1 billion to $1.6 billion over the next year.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times